The city of Mt. Pleasant will be supporting Proposal 1 on the Aug. 5 ballot in hopes of phasing out the state’s personal property tax and replacing it with a new revenue source.

Commissioner Matt Sous said Proposal 1’s passing is important to the city because it means some of the financial instability that has been around since 2012 will finally subside.

“This proposal gives us the opportunity to phase out that tax without having that budget hit,” Sous said. “If this proposal passes, we’ll finally have some certainty as to what’s going to be going on with the personal property tax.”

Proposal 1 would reduce the state use tax and replace it with a local community stabilization share of the tax for the purpose of modernizing the tax system.

Advertisement

This would allow the legislature to use the use tax to reimburse local units of government for their lost personal property tax revenue, Interim City Manager Nancy Ridley had said last month.

The city would get a reimbursement for its lost revenue, Ridley said, which is why commissioners are in full support of the proposal.

City Attorney Scott Smith has served on an interim working group with the governor’s office to do make some of the changes to the tax legislation.

In 2012, the legislature began enacting bills providing personal property tax exemptions with mechanisms that would replace those revenues depending on whether a service was essential or non-essential.

Additional legislation was developed in 2013 in order to declare a process for granting or denying exemptions and to address tax increment financing.

In the spring of 2014, Smith said, those developments were finished.

Small taxpayers can submit an annual affidavit in order to claim exemption if eligibility is met.

Those who qualify are in possession of personal property with a combined cash value of less than $80,000 located within the city.

Those properties that are exempt will result in lost revenue for the city, which is what Proposal 1 aims to make up.

The replacement revenues, Smith said, will come from a local community stabilization share portion of the use tax.

But, Smith said, the city will only get access to that if the ballot is approved in August.

“The use tax is levied by the local community stabilization authority, and the local community stabilization share of the use tax has been calculated each year to provide a 100 percent replacement for local governments,” Smith said. “The idea here, is they wanted to tie up every way it could be tied up so it doesn’t go through the annual appropriations process, and the legislature can’t touch any of this funding,” Smith said.

Sous said that if the ballot proposal does not pass, not only will it result in a loss of many years’ worth of work, but it will also leave the city without the revenue it used to make off of the personal property tax.

“We’ve been counting for taking a hit in the budget on that for years now,” he said. “We (need) to have some kind of way to replace it with revenues that doesn’t disrupt our budget as a city.”

About the Author

Randi Shaffer has been the Isabella County reporter for the Morning Sun since 2012. An alumna of CMU, she is in the process of obtaining her MSA degree. Obsessions include hockey, yoga and vegetables. Reach the author at rshaffer@michigannewspapers.com
.